1. The Owner can bring the proceeding against the Builder by reason of section 9 of the DBCA, as the warranties run with the building. This is not in dispute.
2. The Owner has the burden of proof to satisfy the Tribunal, on the balance of probabilities, of the facts necessary to establish her claims. If the Owner is unable to prove her claims on the balance of probabilities, they must be dismissed.
3. In her Points of Claim dated 26 November 2020, the Owner alleges the Builder is liable for numerous items of defective work, including timber floorboards which are claimed to be noisy and of 'poor quality'. When asked which items of defective work were being pursued in the proceeding, the Owner's counsel replied that only the defective timber flooring was in issue.
4. The Owner alleges the problems with the timber flooring are such that the flooring throughout the dwelling (i.e. upstairs and downstairs) requires removal and replacement at a cost of $26,708, plus furniture storage and alternative accommodation costs of $5,520.

ISSUE 1 - Did the Builder supply the timber flooring as part of the building work?

1. Mr Antoine Harbie, the sole director of the Builder, was called to give evidence in relation to this issue.
2. Mr Harbie said that the Builder was engaged by the developer under a building contract dated 19 November 2015 to construct seven townhouses at the property.[1] After the building contract was entered into, the Builder and the developer signed a further agreement dated 8 February 2016 which varied the obligations of the Builder and developer.[2] One of the variations concerned the supply of the materials for the building work. Mr Harbie referred to clause 6 of the agreement which reads in part:

"Should the Owner wish to directly import materials from overseas - or - purchase them locally from another supplier preferred by the Owner, the Owner takes full responsibility for the quality of materials so used, and here with agrees to make good any defect, now or in the future, that may arise from the use of materials and to bear any costs of any such defects."

1. Mr Harbie said that the purpose of clause 6 was to allow the developer to supply the timber flooring instead of the builder being responsible under the building contract for the supply of this material.
2. Mr Harbie gave evidence that the developer imported timber flooring from China and this is evidenced by a tax invoice from the developer to the Builder dated 23 January 2017.[3] The invoice shows, among other things, one package of spotted gum 263 m² timber flooring at $42.50 - $11,177.50.

1. Mr James, counsel for applicant, submitted the addendum contract dated 8 February 2016 does not alter the position that the Builder was responsible to supply the timber flooring. Clause 6 of the addendum contract sets out that the developer would take responsibility for the quality of the materials imported and the builder would be exonerated from any claims made against it for the use of the materials.
2. Mr James submitted these clauses are waivers of liability rather than variations to the contractual scope of works. This is supported by the parties' subsequent conduct because the evidence shows the first respondent, the developer, sold the timber floorboards to the Builder, and there is an invoice from the developer to the Builder reflecting that transaction.[4]
3. Counsel for the applicant submitted that the invoice is not evidence of some sort of safekeeping arrangement by the builder and the invoice. The invoice refers to GST at 10%. The invoice records the flooring was delivered to the Builder and Mr Harbie accepted in cross examination that he took possession of the materials.
4. From the time of the invoice, the applicant submits the materials were the Builder's materials to use in the performance of the contracted building works, which specified engineered timber flooring. The applicants further submit Mr Harbie gave evidence that he understood the Builder was responsible for the product.
5. Further, the applicant's counsel submitted that if the developer and Builder subsequently agreed to vary the building contract by making the developer responsible for supply of the timber flooring product, such an agreement is void or unenforceable because the Builder is contracting out of the warranty as to supply of materials in section 8 of the DBCA. Sections 10 and 132 of the DBCA provide a party cannot contract out of the warranties.

1. Mr Campbell, counsel for the second respondent, submitted the applicant's claim is purely a contractual claim. By the chapeau of Section 8 of the DBCA, certain warranties are implied into the domestic building contract. The right to take action in respect to a breach of the warranties is not a separate cause of action or a statutory claim. It's a contractual claim under an implied warranty.
2. The section 8 warranties can be divided into 2 categories - the warranties as to workmanship (sections 8(a) and (d)), and the warranty in relation to the supply of materials (section 8(b)). Each warranty is implied into the building contract and section 9 overcomes the doctrine of privity of contract by allowing a party to take proceedings for a breach of the warranties as if that person was a party to the contract.
3. Counsel for the second respondent accepted that, if the Tribunal finds the Builder supplied the materials used, and the flooring materials were defective, the Builder should pay for the rectification works.
4. However, Mr Campbell submitted it would be an absurdity to allow the applicant to sue for breach of the section 8(b) warranty, in circumstances where the Builder did not supply the flooring materials.
5. Mr Campbell submitted that the building contract should be closely considered, given it is the document into which the section 8 warranties are implied. He contended the Builder and the first respondent entered a standard form HIA building contract for the construction of the units. Under the contract, the owner / developer was the first respondent and the builder was the second respondent.
6. Where the applicant is suing on the implied warranties as if she was a party to the building contract, the warranties need to be given their proper construction by looking at the text, context and purpose of the contract. The contract must be given a reasonable and businesslike interpretation. Mr Harbie gave evidence the developer was responsible for and, in fact, sourced the materials from China. He imported the materials and paid for the materials from the supplier. Mr Harbie had no idea who the manufacturer was and had no say in the procurement process.
7. Mr Campbell further submitted the variation agreement dated 10 February 2016 provides important factual background to identifying who supplied the flooring materials. Mr Harbie gave uncontradicted evidence that the supply of timber flooring was the subject of discussions with the owner / developer. The owner said he would like to get materials otherwise than through the Builder. Mr Harbie said to the owner, sure, you can do that, but I'm not responsible because we're not going to be supplying the materials. Mr Harbie told the owner, if he were supplying the material, he would get it from his Australian supplier, who provides a guarantee that the materials are Australian standard compliant.
8. Mr Campbell acknowledged that, usually under a domestic building contract, the builder will be responsible for the supply of the materials and get them from its suppliers or subcontractors, for which the builder is ultimately responsible. However, this is an unusual case. The parties agreed in writing for the owner / developer to supply the flooring materials.
9. Mr Campbell submitted the variation agreement was a mechanism by which the parties could vary their rights under the building contract. By this mechanism, the Builder and the owner / developer could account for a variation, credit or whatever of amounts due under the contract. He further submitted the tax invoice for the supply of the timber flooring materials to the Builder is merely evidence of the mechanistic operation of variation agreement, as per the second part of clause 6 and clause 8 of the agreement. Clause 8 establishes the account by which the owner supplies the materials and the second part of clause 6 envisages the way it is to be done. In other words, the agreement provides the owner is to supply the material through an invoicing of the Builder.
10. Accordingly, the second respondent submits the parties to the building contract agreed in writing to removal of the supply of the timber flooring from the Builder's scope of work. The applicant is bound by the variation agreement.

1. I find the effect of clause 6 of the subsequent agreement dated 10 February 2016 between the Builder and the owner / developer was to vary the building contract to permit the developer to supply the timber flooring material.
2. On the evidence before me, I find the owner/ developer supplied the timber flooring for the unit development and the Builder merely installed the timber flooring. The Builder was not contractually responsible for the supply of the flooring material.
3. I do not agree with the applicant's submissions that the variation agreement is void or unenforceable under sections 10 or 132 of the DBCA because the agreement has the effect of depriving the applicant of her right to sue on the section 8 warranties. I find the variation agreement does not purport to contract out or exclude the applicant's right of action under section 9 of the DBCA.
4. Accordingly, in this case and insofar as it relates to the timber flooring claim, the Owner is unable to rely on the warranty in section 8(b) of the DBCA by which the Builder warrants that all materials to be supplied by the Builder for use in the building work will be good and suitable for the purpose for which they are used.

ISSUE 2 - DID THE BUILDER BREACH ANY OF THE STATUTORY WARRANTIES UNDER SECTION 8 OF THE DBCA?

1. The applicant, Ms Wong, gave evidence that she purchased the townhouse from the developer after inspecting the dwelling on two occasions before signing the contract of sale in January 2019.
2. At the time she inspected the dwelling she did not notice any problems with the timber flooring. Under cross examination, she stated that any defects she was aware of played no part in the negotiation of the purchase price of the townhouse.
3. She said she first noticed creaking for squeaking of the timber flooring in or about mid-March 2019, when she took possession of the property. She also noticed that the flooring was uneven in parts of the townhouse when she put furniture on the flooring. She observed an area of flooring with splinters which had been covered with tape.
4. She gave evidence that she raised the creaking floorboard issue with the Builder after moving into the property. The Builder advised her that the noisy floorboards was normal and should settle over time. She accepted the Builder's advice.
5. She also became aware after taking possession, that parts of the timber flooring were 'lipping' and there were gaps between the floorboards. She raised these and other issues with the Builder. The Builder fixed some of the issues she raised but did not address the problems with the timber flooring, including the creaking of the floorboards which the owner claims to have worsened over time.

1. In support of her claim against the builder, the Owner called an expert flooring consultant, Brett Scarpella, who gave evidence in relation to his report, which was prepared following an inspection of the Property on 28 November 2020.
2. Mr Scarpella identified numerous problems with the timber flooring including audible creaking together with deflection, lipping[5] and gapping apparent in a large proportion of the flooring installation. In his opinion, the floor is not performing to a level that could be reasonably expected of a floor of this type and age, with the concerns raised are considered to be excessive and failed to meet the limitations of acceptability in accordance with the ATFA Engineered flooring standard and the Victorian building authority guide to standards and tolerances 2015.
3. In his opinion, the timber flooring needs to be removed and replaced throughout the dwelling.
4. Mr Scarpella considers that the audible board creaking and deflection are related to a common contributing factor, which is significant variance in the subfloor level. This means that the subfloor which is a concrete slab has not been poured level in places and the timber flooring is creaking and deflecting because of the undulations in the concrete slab.
5. He also considered the lipping and edges between individual boards in both the upstairs and downstairs areas often coincided with creaking and deflection under foot traffic. He further identified 'gapping' was apparent at several butt joins and voids visible at the perimeters, which may be due to the absence of control joints in the flooring installation. He also opined that the absence of control joints may contribute to or exacerbate the creaking and deflection in the flooring. He further identified some issues with the quality of finishing with pencil marks observed on flooring and trims.
6. Mr Scarpella acknowledged that some floating floor products are predisposed to a level of creaking through movement or friction in the locking interface. However, in his view, the primary contributing factor to the problems with the timber flooring relates to subfloor levels downstairs (uneven concrete slab) and installation upstairs (absence of control joints).

1. The Builder called Nicholas Barnes, expert flooring consultant, to give evidence. Mr Barnes spoke to his report dated 13 March 2023.
2. Based on his inspection of the Property, Mr Barnes observed lipping issues in the floating finished timber floor, delamination of the surface veneer and the floor produce a slight spring that would return as normal foot traffic was applied to the floor. Further, the floor randomly produced continual squeaking noise that did not settle after receiving foot traffic.[6]
3. In his opinion, the vertical movement or lipping in the floor is consistent with poor machining of the 2G locking system. This has allowed vertical movement and for the edges of the boards to rub against each other, producing a constant squeaking noise with normal foot traffic. The noise being generated by the boards indicates there is no wax lubricant applied to the locking system at the time of manufacture. According to Mr Barnes, these problems are manufacturing issues.[7]
4. Mr Barnes also observed unlevel substrate in the kitchen/dining area. He opines that if the substrates have not been levelled before installation of the flooring, this can result in the floor producing noise with excessive spring and movement.[8]
5. Overall, Mr Barnes considers the problems of lipping, noise and movement with the timber flooring is consistent with a defective product, not installation of the timber flooring.[9] Mr Barnes considers the unlevel substrate is a minor installation issue and is confirmed to the kitchen/dining room area. He also opines that minor rectification work is required to a few floorboards in bedroom 3, a minor gap in the flooring between bedroom 2 and the hallway, and installation of an expansion joint under a sill near the bedroom robes.[10]
6. Mr Barnes estimated the cost of removal and replacement of the floor was $28,420.13. He estimated the cost of rectifying the minor installation issues, including levelling the substrate in the kitchen/dining area, was $1,600 for materials and $720 for labour, plus 10% GST. This produces a cost of $2,552 including GST.

1. Mr James submitted the experts for both parties agree the timber flooring material was defective. However, by using defective materials, he submitted that the Builder is still in breach of the section 8 warranties as to workmanship. The Builder breached the warranties that the work would be carried out in a proper and workmanlike manner and with reasonable care and skill, per section 8(a) and (d) of the DBCA.
2. Mr James submitted that Mr Scarpelli's expert opinion should be accepted. In his report, Mr Scarpelli observed the floor was demonstrating audible creaking, deflection under traffic, gapping at board ends and lipping throughout the greater floor area on both levels. Mr Scarpelli opines the floor is not performing at a level that could be reasonably expected of a floor of this type and age, with the concerns raised considered to be excessive and failing to meet the various standards. He concludes that these problems are most likely related to the levels of the ground floor concrete slab, at least on the ground floor. He considers the slab had not been successfully prepared and that is an installation issue.
3. Mr James noted that Mr Scarpelli considers the lipping and noise issues on the first floor are probably manufacturing issues, but he also observes installation issues upstairs, including gapping and absence of control joints and compartmentalization. The major installation issue that he identified was variation in the finished floor levels and he measured them at 6mm to 8mm over a 2 metre span, which he considers is not suitable for any floor covering.
4. In relation to the applicant's loss, counsel for the applicant submitted the general rule for damages for breach of contract is stated in Robinson v Harman,[11] that is to put a party so far as money can do in the same situation as if the contract had been performed. In a building context, the guiding authority is Belgrove v Eldridge,[12] by which an owner is entitled to have a building which complies with the contract plans and is therefore entitled to the cost of rectification as damages, if it is a reasonable course to adopt.
5. Mr James submitted that the appropriate remedy for the defective timber flooring is removal and replacement of the flooring on the ground floor and first floor. This was the reasonable method of rectification and the only way the timber flooring could be made fit for purpose. The applicant relies on the quotation she obtained for the replacement of the floorboards of $26,708. She also relies on advice from a flooring consultant that the remedial work would take 2 to 3 weeks and she would have to vacate the property and have her furniture stored. The cost of 2 weeks' temporary accommodation would be $3,440. The total loss claimed is $32,228.00, including GST. Otherwise, Mr James submits the Tribunal could accept the cost estimate of Mr Barnes, who gave a higher cost estimate of $28,420.13 for replacement of the timber flooring.
6. Counsel for the applicant further submitted that, if the Tribunal finds the Builder is only liable for installation defects, this has no impact on the owner's loss and damage. Mr Scarpelli considers the flooring issues to be at the severe end of the amelioration spectrum, and significant works would be required to bring the installation to a suitable condition. Mr Barnes agreed the concrete subfloor will require levelling.
7. Further, Mr James submitted full removal and replacement of the timber flooring was required because Mr Scarpelli was of the view that replacement of sections of the flooring risk damage to 5% to 10% of the entire flooring and it would be very difficult to match replaced sections of flooring with the existing timber flooring. In this case, to give the applicant a lesser remedy would be unreasonable, as the remedy would be doubtful as to properly repairing the installation issues. As damages are to be awarded on a once and for all basis, the appropriate and certain remedy is full replacement of the timber flooring.

1. Mr Campbell submitted that Mr Barnes' opinion as to the installation issues and the cost of rectification should be accepted.
2. He submitted Mr Barnes' evidence should be preferred by the Tribunal because he thoroughly inspected the property and identified all the issues that he found. The issues identified by Mr Barnes go well beyond the issues identified by Mr Scarpella. For example, Mr Barnes identified that there was no wax lubricant on the floorboard locking mechanism. Mr Scarpella said he didn't inspect that issue. Mr Barnes identified that the wardrobe closet track was screwed into the floor. Mr Scarpella also didn't identify that issue. Further, only Mr Barnes identified the delamination of some of the pieces of timber flooring.
3. Mr Campbell further submitted that, under cross-examination, Mr Scarpella made appropriate concessions about alternative means of fixing a lot of the workmanship issues. For example, he accepted that control joints could be introduced after the fact and that is often done.
4. There was also considerable agreement between the experts about the nature and extent of the installation issues. However, Mr Campbell submitted the major difference in the experts' opinions concerned the uneven flooring and that was identified only downstairs living / dining area. He submitted Mr Barnes' evidence should be preferred because Mr Scarpella gave evidence that the subfloor would be uneven in other areas of the dwelling. However, Mr Scarpella said that he had not measured the levels of the other areas of timber flooring.
5. On the other hand, Mr Barnes gave evidence that he checked the entire floor and found only one instance of it being out of tolerance, in the downstairs living / dining area.
6. As to the cost of rectification of the installation issues, Mr Barnes estimated it would cost $2,320 plus GST. He allowed $1,600 for the grinding and levelling work, together with timber board replacement work, to the subfloor downstairs and $720 (based on 8 hours of labour at $90 per hour) for the upstairs rectification work.
7. Mr Campbell submitted that, if the Builder is liable for the installation issues, the Tribunal should accept Mr Barnes' scope of remedial work and estimated cost of rectification as the reasonable method and cost.

1. Having considered the experts' evidence and the parties' submissions, I accept Mr Barnes' opinion that the cause of the lipping and noise in the timber flooring is due to manufacturing defects to the floorboard locking mechanism. I prefer his evidence because he has conducted a more forensic and rigorous examination of the timber flooring than Mr Scarpella.
2. I do not accept Mr Scarpella's opinion that the lipping and noise in the flooring is due to unevenness of the subfloor because Mr Scarpella has not measured all the timber flooring in the dwelling and agrees that the lipping and noise to the upstairs flooring has not been caused by the first-floor subfloor being out of level.
3. Accordingly, I find these issues have arisen from defects in the timber flooring material and the Builder is not liable for any breach of the section 8 warranties in respect of the supply of materials.
4. I accept Mr Barnes opinion that the unevenness in the subfloor concrete slab is confined to the downstairs living / dining area. Mr Barnes measured the levels of the flooring throughout the dwelling whereas Mr Scarpella only measured the floor in the living / dining area. I find this is an installation defect for which the Builder is responsible.
5. I also accept Mr Barnes' evidence about the other minor flooring installation issues, which he identified to the first-floor flooring. I find these are installation defects for which the Builder is responsible.
6. Accordingly, I find the Builder has breached the warranties as to workmanship in section 8(a) and (d) of the DBCA and is liable for the reasonable cost of rectification of the installation issues identified by the respondent's expert, Mr Barnes.

ISSUE 3 - HAS THE OWNER SUFFERED ANY LOSS OR DAMAGE BY REASON OF THE BUILDER'S BREACH OF ANY OF THE WARRANTIES?

1. I accept the applicant's submission that the problems with the timber flooring, which are due to defects in the materials and installation issues, warrant removal and replacement the timber floor throughout the dwelling.
2. However, as I have found the Builder is only liable for breach of the warranties as to workmanship (being section 8(a) and (d)), I will allow damages for the reasonable cost of rectifying defective installation of the timber flooring by the Builder.
3. Mr Barnes has provided a scope of rectification work to address the installation issues upstairs and downstairs. He estimates the cost of rectifying the installation issues to be $2,552 inclusive of GST.
4. I accept Mr Barnes' scope of remedial work and find that it is a reasonable method of rectification. There being no evidence to the contrary, I further find his cost estimate for the rectification work to be reasonable.
5. Accordingly, I will allow damages in the amount of $2,552 for the applicant's loss and damage.

[4] Tax invoice at page 58 of the second respondent's list of documents.

[5] Lipping means 'heigh variation at the board joints'.

[11] [1848] EngR 135; (1848) 154 ER 363.

[12] [1954] HCA 36; 90 CLR 613.